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MilliporeSigma's Robert McGuirk speaks with Pharma Exec about the role of supply chain robustness in helping to mitigate the risk of drug shortages
Robert McGuirk is Head of Process Solutions Supply Chain at MilliporeSigma. The life science business of Merck KGaA, Darmstadt, Germany operates as MilliporeSigma in the U.S. and Canada. MilliporeSigma has approximately 25,000 employees, 54 manufacturing sites worldwide and a portfolio of more than 300,000 products focused on scientific discovery, biomanufacturing and testing services. Here, he speaks with Pharma Exec about the role of supply chain robustness in helping to mitigate the risk of drug shortages.
Robert McGuirk: If we look back at the last decade or so, we see that the number of new drug shortages in the United States peaked in 2011 at 267, more than tripling the total from 2005. The U.S. then had a few years of high but relatively stable numbers and now new shortages are again on the rise. There were 186 new shortages last year, up from 146 in 2017 and the highest number since 2012. In Europe, drug shortages are reaching an all-time high. And, if we factor in the effect of the corona virus, we could potentially anticipate more drug shortages. In fact, FDA has already reported its first drug shortage due to the coronavirus.
It all adds up to a challenging situation for the biopharma industry and even more so for the medical community and patients.
In response to drug shortages, regulatory agencies around the world have released guidance related to enhancing the safety of the global supply chains, including the 2011 EU Falsified Medicine Directive, 2012 FDA Safety and Innovation Act and 2013 Drug Supply Chain Security Act.
In 2019, the Drug Shortages Task Force1 established by the US FDA published a report detailing the root causes and potential solutions for the drug shortage crisis. Among the root causes cited were the logistical challenges brought on, in part, by drug supply chains becoming longer, more complex and fragmented as companies increasingly leverage global production sites and contract manufacturers. Complex raw materials supply chains create greater risk and can limit the ability of drug manufacturers to increase production in a timely manner.
Similarly, the supply chains we have established and manage at MilliporeSigma are increasingly extended and complex. When I started in this business twenty-five years ago, most of my suppliers were in the US and that is not the case today – our supply base is global. This new reality requires that we closely manage all of our own supply chain partners to ensure a consistent and high-quality supply of materials for our biopharma customers.
Adding to this challenge is the need to also stay ahead of increasing demand that stems from remarkable new modalities such as cell and gene therapies, and the growing interest in developing biosimilars. Demand continues to increase for everything from single-use technologies and materials for drug manufacturing to reagents for growing cells. And of course, you also have to anticipate and plan for the impact of natural disasters on the supply chain and be mindful of changes in the geopolitical landscape which can create havoc.
The bottom line is that longer and more complex supply chains create greater risk, which in turn, can trigger a domino effect leading to a drug shortage.
I will start by saying that risk is inevitable and increasing in today’s climate as I touched on above. Ultimately, it all comes down to identifying and managing that risk; companies that have a strong focus and risk management approaches are, not surprisingly, most successful.
There are a number of best practices we employ and leverage and recommend to our customers.
It is important for our customers to select the raw materials with the right quality levels to begin with. Then, it’s incredibly helpful when our customers are able to accurately and efficiently translate anticipated patient demand into material, equipment and capacity needs. While the demand need not be 100 percent predictable, knowing the assumptions that are built in helps us have better alignment in terms of expected needs. We have customers who do a fantastic job with this and others who find it more challenging.
We have also found it to be beneficial to have our supply chain team directly engage our customers’ supply chain teams and have a more strategic discussion rather than a tactical and transactional engagement. This dialogue is most effective if customers are willing to talk to us in terms of numbers of batches or kilograms produced per year and where versus, let’s say, the number of filters needed. If we can discern the bill of materials, we can identify what the expectation is from a demand perspective. In this situation, proactive and transparent communication allows the collective team to course correct before something becomes a major issue. At the end of the day, the goal is to avoid the situation in which a supplier doesn’t have the installed infrastructure in place to handle significant changes in demand, as this can open the door to idle biopharmaceutical manufacturing capacity and potentially a drug shortage.
Biopharma companies should also be prepared to accept an increase in change notifications as we expand our supply network, increase capacity and qualify secondary sources. We follow a very robust change management process in alignment with industry best practice guidance and provide comprehensive data packages to support our customers in accelerating the acceptance of these changes, including acceptance of finished goods from these new plants or with 2nd sources of raw materials.
Our most important program in terms of risk management is our business continuity planning which is carried out at the product portfolio level. We leverage a cross-functional team to identify, assess, quantify and then develop risk mitigation measures. With this program, we prioritize risks, understand the major sources and take action.
In addition to this review at the product portfolio level, we also conduct reviews from a strategic, critical raw materials perspective in the form of supplier relations supplier relationship management (SRM) meetings with our suppliers to define mutual goals as it relates to quality and supply chain. The process is resource-intensive on both sides, but the resulting direct dialogue between supply and quality teams is quite beneficial.
As part of the SRM meetings, we look at several dimensions across the supply chain including raw materials, capacity compared with demand, IT infrastructure and distribution network. We use a heatmap of probability and impact to identify the biggest risks and then identify what actions can be taken to mitigate those risks; in some cases, the solution might be investing in capacity, for others, adoption of inventory strategies where raw materials are held in multiple regions, for example. We also map our suppliers so we know exactly where components are manufactured; this can enable inventory to be prepositioned in advance of something like a hurricane and avoid potential supply disruptions. We strongly recommend this type of mapping exercise for our biopharma customers.
It’s not a question, but one of the first steps is to embrace the fact that risk is inevitable – it’s going to happen, and you can’t ignore it. Given that mindset, I would advise biopharma executives to ask the same questions we ask ourselves and our suppliers to help mitigate disruptions and the potential of drug shortages:
• Is our business continuity program as robust as possible?
• What are our top five risks?
• What are we doing to mitigate those risks?
Like our customers in the biopharma industry, we believe that one drug shortage is too many and we need to aggressively and proactively seek out and address risks that might lead to this situation. The best way to do this is in partnership and with a foundation of open and transparent communication.